The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Nuclear power, the ability to harness the titanic amounts of energy released when one atom splits into two, is the most important breakthrough in the history of energy technology.

So why has the "nuclear dream" fallen short of what we expected?

Nuclear power is not the problem. People are the problem. More specifically, the institutions people have put in place to manage nuclear power have proven to be more effective at reaping the rewards than reducing the risks of nuclear power.

The fiasco unfolding at the Fukushima nuclear plant is an especially alarming case in point.

Damian Carrington, an environmental blogger at The Guardian, captured the crux of the problem like so:

The fundamental reason why the price of nuclear power climbs each day as surely as the rising sun is a straightforward one. Keeping a lid on costs is impossible if the task in hand is keeping the lid on an exploding atomic bomb.

For that is what a nuclear reactor is, a slow motion detonation. That intrinsic danger means that as each new risk to reactors is discovered, more and more expensive measures need to be put in place as mitigation. When accidents happen, as they will over a half century or more of operation, the intrinsic risk of radioactive materials means more money is piled on the bonfire to ensure the risk to the public is limited.

To expand on Carrington’s analysis, investor-owned utilities like the Company (TEPCO), which operates the nuclear reactors at Fukushima, are legally obliged to shareholders to maximize profits and limit costs.

In the context of the Fukushima nuclear reactors, this alchemy proved to be a recipe for disaster.

In 2007, TEPCO narrowly avoided a meltdown a nuclear facility twice the size of the Fukushima reactors after a 7.1 magnitude earthquake inflicted major structural damages.

In response, TEPCO idled the Kashiwazaki-Kariwa Nuclear Power Plant for nearly three years and invested heaps of cash on design upgrades and related seismic-hardening retrofits. This idle capacity put a giant hole in TEPCO’s revenues and significantly weakened the company’s financial performance.

Facing pressures from investors, TEPCO' cut costs aggressively across the board to improve the company’s returns.

By 2010, TEPCO had moved out of the red and back into the black, primarily as a result of these cost cutting efforts.

While these efforts did not “cause” the crisis at Fukushima, they are symptomatic of the underlying factors that did.

Taking the Fukushima plants offline would have triggered massive rate increases – and accompanying political backlash – because TEPCO would have had to supply a massive share of its rate-base with high-price natural gas power plants.

These forces encouraged management to cut costs at Fukushima to support the capital investments in retrofitting the “much larger nuclear” plant, which is the world's largest nuclear facility, for earthquakes.